The Morning Report
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California is emerging from one of the worst droughts in its modern history, a dry spell that prompted emergency regulations and some deep reflections on the fragile nature of our water supplies.
The recent rain and snow across much of the state seem to have given water agencies breathing room to think long and hard about one oft-floated solution that came up a lot during the drought: desalination.
Santa Barbara just reopened a desalination plant it closed two decades ago, but it’s not sure how long it will be needed.
Poseidon Water, which built the largest desalination plant in the country in Carlsbad, wants to build another in Huntington Beach. But after spending over a decade on prep work, the company lacks needed permits to start construction and doesn’t have anybody who has promised to buy the water.
The Otay Water District just got a federal permit to build a pipeline across the border to get water from a new plant south of Tijuana. That project still faces a few hurdles, too, and no water will flow to the United States for another seven years.
One general obstacle to desalination has been outright opposition. Making ocean water drinkable is expensive, takes a lot of energy and can hurt coastal habitat.
There are also often other options: Environmentalists and water officials generally prefer to try water recycling and water conservation efforts before investing in expensive desalination facilities.
Poseidon recently hired former Sen. Barbara Boxer to help push the Huntington Beach project. In an op-ed for the Sacramento Bee, she called the plant a “no brainer” that “makes enormous sense.”
But if the new Poseidon plant does get built, Orange County water officials may end up dumping the desalinated water – some of the most expensive treated water in the world – into the ground to be used later.
The Irvine Ranch Water District in Orange County would, in theory, benefit from more water. But its general manager, Paul Cook, said the current plan for the plant is comical and crazy.
“They came up with idea of dumping this perfectly good drinking water into the ground,” Cook said. “It’s just amazing.”
Of course, the water will eventually be pulled out of the ground and used. But it would have to first be treated again, an additional cost for an already expensive supply.
Desalination won its biggest West Coast victory in 2012 when the San Diego County Water Authority agreed to help Poseidon build the Carlsbad plant.
The Water Authority did so, in part, by promising to buy a certain amount of water every year, whether the water was needed or not. The plant opened in December 2015. Within a few months, San Diego didn’t need the water but had to buy it. The water was dumped into a lake and had to be treated again before it could be used.
San Diego Water Authority officials said the Carlsbad plant, which can produce about a tenth of the water the county uses in a year, is a good long-term investment. The two places where San Diego gets the rest of its water – the Colorado River and the rivers of Northern California – are both considered unreliable over the long term. That’s in part because of climate change and in part because of inadequate infrastructure.
Hiccups with desal are not unique to San Diego, though.
In Santa Barbara, for instance, a relatively small, $34 million plant opened at the tail end of a drought in the early-1990s but was quickly closed down because it suddenly rained a lot.
Then drought struck again and Santa Barbara decided during the most recent drought to reopen the plant, at a cost of $71 million. Now the plant has been retrofitted to be more energy-efficient and to operate inexpensively in standby mode if it suddenly rains again.
Santa Barbara owns and operates its own plant, though, so it doesn’t have to buy water if it doesn’t need it, like San Diego does.
Kelley Dyer, Santa Barbara’s water supply manager, said because the water from the plant is so expensive, the plant will likely be idled when it’s not needed.
“It’s not to sustain our existing demands for water,” she said.
For now, Santa Barbara, unlike much of the rest of the state, remains in a drought. The heavy rains that hit other parts of California mostly missed the central coast city.
In Orange County, support for the second Poseidon plant is mixed. Environmental groups, which opposed the Carlsbad plant, also oppose the Huntington Beach plant.
Poseidon is confident it can overcome such hurdles, in part because it has before. The Carlsbad plant took years of regulatory review and faced 14 legal challenges from environmental groups.
Susan Jordan, director of the California Coastal Protection Network, is one of the Huntington Beach plant’s chief critics. She said her impression is that support for the plant has been waning.
“I think, from what we’re seeing, the local water agencies are starting to push back,” she said. “They are starting to look at really being committed to 50 years of really expensive water in a take-or-pay contract, and that’s really scary if you’re trying to manage a water district.” (Take-or-pay is a fancy term for a contract that obligates a water agency to buy water from someone, even if the agency doesn’t need it.)
Poseidon Vice President Scott Maloni pointed to letters of support the Orange County project has from every level of state and local government.
“These letters, dated over several years, illustrate the need and benefit of the project, and its importance as a critical component of long-term water supply is not a function of rain or drought,” he said. “Rather, seawater desalination is a strategic piece of the state’s overall water resources planning.”
The company has some support, but not yet the permits it needs to open the plant. It must pass through three more regulatory hoops: the State Lands Commission, the Regional Water Quality Control Board in Orange County and the California Coastal Commission.
The company also does not have a buyer for its water.
Poseidon has signed a term sheet with the Orange County Water District, but it’s not a binding contract.
The Orange County Water District is an interesting partner for Poseidon, since the district’s job is to manage the vast groundwater basins of Orange County.
The district’s executive director, John Kennedy, said because of the agency’s mission, it’s “institutionally the simplest option” to take Poseidon’s water and inject it either into the ground to fill up the county’s depleted groundwater basin or along the coastline to keep back saltwater. In both cases, the water would be retrieved for later use.
That’s not ideal, of course. Kennedy said the district is also talking about trying to sell the water directly to cities without putting it into the ground, but that would require $200 million or more in new distribution facilities.
Kennedy said if Orange County Water District signs a binding agreement with Poseidon, it will want a better deal than San Diego officials got.
“If we’re going to do the Poseidon project, we’re going to want a really good deal,” he said.
The structure of the deal the San Diego County Water Authority signed with Poseidon allows the company and its investors to make a return of about 10 to 13 percent, if certain construction and operating conditions are met. Orange County officials would want a lower rate, in part because they already have a more diverse water supply than San Diego, which was about 95 dependent on imported water before the desalination plant was built.
Former Huntington Beach Mayor Debbie Cook, who opposes the desalination project, said the pressure on the Orange County Water District is coming from Poseidon to make a deal good for the company, not the other way around.
“And I keep thinking if people think we need desal, why do we need Poseidon?” Cook said. “Why wouldn’t you go out for a bid?”
Kennedy said the reason is simple: Poseidon has put in 15 years and about $50 million to get the Huntington Beach plant built. It’s an ideal site and it’s only fair to the company that if a plant is built, it’s a Poseidon plant, he said.
He is also mindful of the long-term bet that the San Diego County Water Authority and its general manager, Maureen Stapleton, made when they signed the Poseidon deal.
“I’m sure Maureen is looking 15, 20 years out also and it’s a great insurance policy, and what’s the value of that, to pay an extra $5 a month for an insurance policy?” Kennedy said. (The average San Diego water customer’s bill went up by about $5 because of the Carlsbad plant.)
Within San Diego, the Otay Water District is looking at another desalination project, in Mexico. The water from that project may be about half the price of the water from the Carlsbad plant, according to an analysis last year by the Water Desalination Report, an industry newsletter.
Otay just got approval from the Trump administration to build a four-mile pipe across the border to get the water. The permit was criticized by environmental groups, the mayor of Imperial Beach and San Diego’s top water quality official. They all worried the plant could indirectly worsen the decades-long problem of sewage spilling across the border into the United States.
The project is still a few years off, though: Water would not be available for use in the United States until 2024, and Otay still needs to get a state drinking water quality permit.